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Two massive infrastructure projects will change the face of Kowloon forever. And that's not all, because there are ambitious regeneration plans for the old areas of the peninsula.

The story so far highlights the rebirth of West Kowloon, where a master-planned area - complete with office towers, city parks, museums, hotels and residential buildings - is half way to completion.

Chapter two shows East Kowloon taking centre stage with the Kai Tai development, which many believe will be the growth engine for Hong Kong's housing market in the next decade.

The big picture in this intriguing tale of Kowloon's remarkable rise to prominence shows that the private residential market is taking shape in several areas, such as West Kowloon, the coastal area served by Kowloon and Olympic stations, extending to Cheung Sha Wan and Lai Chi Kok, including Mei Foo; East Kowloon, including Kwun Tong, Wong Tai Sin, Kowloon Bay and the Kai Tai development area; Central Kowloon, Ho Man Tin, including King's Park; Kowloon Tong; and southern Kowloon, such as Tsim Sha Tsui and Hung Hom.

Fifteen years after the handover, the development of West Kowloon has substantially reshaped Hong Kong's skyline. Since 1997, the relocation of the old airport from Kai Tai to Chek Lap Kok in Lantau has spawned a number of infrastructure projects, such as the Western Harbour Tunnel, Route 3, the MTR's Tung Chung Line and Airport Express.

Benefiting from these multibillion-dollar government-funded projects was West Kowloon. The area is served by Tung Chung Line, Airport Express and West Rail Line, and will also be the terminus of the much-anticipated high-speed railway that will connect Hong Kong to other mainland cities. Soon, residents in West Kowloon will enjoy entertainment on a grand scale, thanks to the planned West Kowloon Cultural District - featuring a museum, theatres, concert halls, city parks and a waterfront promenade - costing the government more than HK$20 billion.

This regeneration has resulted in property prices soaring. A 1,260 sq ft apartment in The Arch at Kowloon station sold for HK$30.60 million, or HK$24,286 per square foot, while a 1,456 sq ft apartment in The Hermitage, near Olympic station, sold for HK$18.15 million, or HK$12,466 per square foot.

The Coronation, a large-scale project in West Kowloon, jointly developed by Sino Land, Nan Fung, K. Wah and Chinese Estates, has become a best-seller this year, with more than 90 per cent of the 740 units sold since it was launched for sale in January. About half of the buyers are investors, according to the developer.

At the foot of Lion Rock, East Kowloon is a high-density residential district with a mix of private and public housing estates. With East Kowloon being branded as Hong Kong's second central business district by the government, its housing market has been injected with a new dose of confidence.

The first phase of the Kai Tai development project is now under way and is expected to be completed next year. The entire project includes a cruise terminal building, public rental housing and other supporting infrastructure.

At the same time, East Kowloon will be made more accessible with some road and rail links to be constructed over the next decade, including the Sha Tin to Central Link, which is expected to be completed in 2015 and go to Hung Hom; the Central Kowloon Route; and Trunk Road T2, both of which are due to be completed in 2016. Internal linkages may also be improved, with a proposed monorail system connecting Kai Tak station and Kwun Tong MTR station, and the town centre now under public consultation.

Home prices in the neighbourhood are already rising. A 1,090 sq ft apartment at the Grand Waterfront sold for HK$12.55 million, or HK$11,514 per square foot. A 1,263 sq ft apartment at the Lions Rise in Wong Tai Sin sold for HK$18.87 million, or HK$14,938 per square foot.

"With the completion of the [Kai Tak] cruise terminal in 2020, foreign and institutional investors will be the target buyers of the new residential projects in Kai Tak, instead of local middle-class families, who are now the major occupiers of the private housing estates in Kowloon East," says Raymond Ho, managing director of Vigers, a property consulting firm.

"Many infrastructure, leisure facilities and amenities, such as stadiums, landscaped parks and waterfront promenades, will be built to make it one of Hong Kong's most desirable places to live. And all these factors will help bring up land prices and property values to potential buyers and investors."

Also in East Kowloon, the Kwun Tong Town Centre redevelopment project is another government-led project that will help the old industrial district transform into a modern commercial and residential district. The Urban Renewal Authority (URA) has announced the final revision to the project, and expects to turn Yue Man Square, the traditional core of Kwun Tong, into a city centre with a large green area. This multibillion-dollar project covers 5.35 hectares and is the biggest and most complex ever undertaken by the authority. It involves 24 buildings, 1,640 property rights, 1,860 families and 300 shops. In May, the Lands Department announced that it would accept redevelopment proposals for conversions of 23 industrial buildings in Kwun Tong and Kowloon Bay into other uses, including grade A offices, hotels and serviced apartments.

Apart from its fast-developing western and eastern areas, land supply has been always been tight in the inner parts of Kowloon.

In the luxury sector, supply of flats in excess of 1,000 sq ft in Kowloon will remain low in the near future. According to the government's projection, only 411 large units will be completed by the end of 2012, accounting for less than 14 per cent of total supply of large units in Hong Kong. The proportion is expected to fall to 6 per cent next year.

In September, The Grandeur, an apartment complex near Kowloon Tong, developed by China Overseas Land and Investment, was given presale approval. The project comprises only 28 apartments, ranging from 2,800 sq ft to 3,000 sq ft in gross floor area. All standard units in One Mayfair, on Broadcast Drive, developed by Sino Land, have been sold. In the secondary market, a 1,377 sq ft apartment at One Beacon Hill sold for HK$35 million, or HK$25,418 per square foot. A 1,405 sq ft at Peninsula Heights sold for HK$16.18 million, or HK$11,516 per square foot. There are only a few residential sites in Kowloon on the Application List available for developers to purchase. Future residential sites in Kowloon will be in the Kai Tak area and Kwun Tong Town Centre, and other smaller-scale redevelopment projects. In the short term, new supply in Kowloon, especially in prime areas, will remain tight.

One of the largest urban residential projects will be launched next year. It will sit next to the West Kowloon Cultural District and the planned Express Rail Link. A joint venture between Wheelock and New World Development, Phase 1 will provide 576 units and will be located at Austin Station. "Developments ... along the MTR would have strong potential for value appreciation," says Ricky Wong Kwong-yiu (above), managing director of Wheelock Properties.

KOWLOON TONG PRICES FIRM

Despite government cooling measures, Thomas Lam Ho-man, director and head of research for Greater China at Knight Frank, says Kowloon Tong's luxury home prices will be more resilient than those in West Kowloon.

"Most landlords of luxury houses and apartments in Kowloon Tong are owner-occupiers and cash-rich. Given the low-interest-rate environment, they feel little pressure to sell at a discount," he says.